GLENEALY Plantations (M) Bhd subsidiary Timor Enterprises Sdn Bhd has entered into an agreement with Samling Reforestation (Bintulu) Sdn Bhd (SRB) for the transfer of licence relating to a planted forest in Bintulu, Sarawak, for RM11.49mil cash.
The licence has a tenure of 60 years, from Dec 8, 1998, to Dec 7, 2058, with an unexpired tenure of 55 years,'' Glenealy told the KLSE.
The licence was granted to establish and maintain a planted forest on an 81,900ha area within Belaga district, incorporating an oil palm plantation within an existing tree plantation area.
The oil palm planting compartment has a gross area of 10,871ha, of which 1,571ha are shifting agriculture areas.
The proposed transfer would enable Glenealy to expand its oil palm business for long-term growth, Glenealy said. In addition, diversifying into tree planting would enable the group to be not over-reliant on oil palm.
Future income from tree planting also acts as a hedge against cyclical oil palm prices and may be expected to cushion the fall of such prices.
Glenealy said the transfer would not have any material effect on its earnings for the year ending June 30, 2003, but is expected to enhance future income.
Samling Strategic Corp Sdn Bhd and Perkapalan Damai Timur Sdn Bhd, the major shareholders of Glenealy, are also substantial stakeholders of SRB, holding equity interests of 70% and 30%, respectively.